≈ It’s all about risk vs. reward ≈
Traders,
When two items are unbalanced, it’s known as asymmetry. And when it comes to trading, the right type of asymmetry can be an excellent thing.
Think about risk versus reward. Smart traders seek situations where the risk is small, and the reward is large. I call it Favorable Asymmetry. Generally, we look for trades where the reward is double the potential risk. In other words, it’s a 2 to 1 reward to risk ratio. Some individuals may try to skew the asymmetry further and find trades with a ratio of 3 or 4 to 1 ratio.
Now, where might we find such enticing trading opportunities?
At support and resistance levels.
Entering positions near these floors and ceilings allows for the placement of a tight stop loss. That, in turn, creates small risk and makes it far easier to have a high reward to risk ratio.
Favorable Asymmetry.
Here’s the kicker. Remember yesterday’s message mentioned the favorable odds you get when placing trades at support and resistance? Even if the win rate doesn’t exceed 50%, you can still be profitable if you have a sufficient reward-to-risk ratio.
🛑 Upcoming Webinar – Technical Analysis 101: The Basics of Support and Resistance with Coach Matt Justice | January 31st, 2022 at 8:30 PM EST on YouTube
Join us to learn more about two simple, but powerful, concepts in Technical Analysis known as Support and Resistance. Support and resistance not only represent various price levels; they also represent supply and demand on a technical price chart. Traders use these levels for a variety of important reasons, and you should spend some time learning more about them to improve your understanding of these powerful concepts.
In this webinar you are going to learn:
✅ What is Support
✅ What is Resistance
✅ Demand as Support
✅ Supply as Resistance
✅ How Traders use Support and Resistance
✅ Pivot Point Analysis in Support and Resistance
✅ Examples of Support and Resistance
Click on the button below to go to YouTube and set a reminder so you won’t miss it when Coach Matt goes LIVE.
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Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cash Flow Club Replay
If you missed last night’s episode when Coach Mark Justice talked about Naked Puts or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
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